Notice2025-22403
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Exchange's Transaction Fees at Nasdaq Rule Equity 7, Section 118, To Add a New Tier of Credit for Non-Displayed Orders (Other Than Supplemental Orders) That Provide Liquidity
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Published
December 10, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 235 (Wednesday, December 10, 2025)</title>
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[Federal Register Volume 90, Number 235 (Wednesday, December 10, 2025)]
[Notices]
[Pages 57228-57230]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-22403]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104331; File No. SR-NASDAQ-2025-094]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
To Amend the Exchange's Transaction Fees at Nasdaq Rule Equity 7,
Section 118, To Add a New Tier of Credit for Non-Displayed Orders
(Other Than Supplemental Orders) That Provide Liquidity
December 5, 2025.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on November 26, 2025, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the Exchange's transaction fees at
Nasdaq Rule Equity 7, Section 118, to add a new tier of credit for non-
displayed orders (other than Supplemental Orders) that provide
liquidity.
While these amendments are effective upon filing, the Exchange has
designated the proposed amendments to be operative on December 1, 2025.
The text of the proposed rule change is available on the Exchange's
website at <a href="https://listingcenter.nasdaq.com/rulebook/nasdaq/rulefilings">https://listingcenter.nasdaq.com/rulebook/nasdaq/rulefilings</a>, and at the principal office of the Exchange.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to amend the Exchange's
schedule of credits, at Equity 7, Section 118(a)(1), which applies to
the use of the order execution and routing services of the Nasdaq
Market Center for all securities priced at $1 or more. The Exchange
currently provides a credit to members for non-displayed orders (other
than Supplemental Orders) that provide liquidity. The Exchange is
proposing to add a new credit tier of $0.0015 per share executed in
Tape A or Tape B, and $0.0010 per share executed in Tape C. This credit
tier will be available to a member that (i) provides 0.10% or more of
Consolidated Volume \3\ though non-displayed orders
[[Page 57229]]
(other than midpoint orders) and (ii) increases providing non-displayed
liquidity (other than midpoint orders) by 30% or more relative to the
member's September 2025 TCV [sic] provided through non-displayed orders
(other than midpoint orders). Unless otherwise extended, this tier will
expire no later than the end of March 2026. The Exchange hopes that by
proposing the new credit tier it will incentivize members to increase
their non-display liquidity (other than midpoint orders) providing
activity on the Exchange, which will improve overall market quality.
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\3\ Equity 7, Section 118(a) defines Consolidated Volume as the
total consolidated volume (``TCV'') reported to all consolidated
transaction reporting plans by all exchanges and trade reporting
facilities during a month in equity securities, excluding executed
orders with a size of less than one round lot.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\4\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,\5\ in particular, in that it provides
for the equitable allocation of reasonable dues, fees and other charges
among members and issuers and other persons using any facility, and is
not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers.
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\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange's proposed change to its schedule of credits is
reasonable in several respects. As a threshold matter, the Exchange is
subject to significant competitive forces in the market for equity
securities transaction services that constrain its pricing
determinations in that market. The fact that this market is competitive
has long been recognized by the courts. In NetCoalition v. Securities
and Exchange Commission, the D.C. Circuit stated as follows: ``[n]o one
disputes that competition for order flow is `fierce.' . . . As the SEC
explained, `[i]n the U.S. national market system, buyers and sellers of
securities, and the broker-dealers that act as their order-routing
agents, have a wide range of choices of where to route orders for
execution'; [and] `no exchange can afford to take its market share
percentages for granted' because `no exchange possesses a monopoly,
regulatory or otherwise, in the execution of order flow from broker
dealers'. . . .'' \6\
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\6\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (Dec. 2, 2008),
73 FR 74770, 74782-83 (Dec. 9, 2008) (SR-NYSEArca-2006-21)).
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The Commission and the courts have repeatedly expressed their
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. In Regulation
NMS, while adopting a series of steps to improve the current market
model, the Commission highlighted the importance of market forces in
determining prices and SRO revenues and, also, recognized that current
regulation of the market system ``has been remarkably successful in
promoting market competition in its broader forms that are most
important to investors and listed companies.'' \7\
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\7\ Securities Exchange Act Release No. 51808 (June 9, 2005), 70
FR 37496, 37499 (June 29, 2005).
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Numerous indicia demonstrate the competitive nature of this market.
For example, clear substitutes to the Exchange exist in the market for
equity security transaction services. The Exchange is only one of
several equity venues to which market participants may direct their
order flow. Competing equity exchanges offer similar tiered pricing
structures to that of the Exchange, including schedules of rebates and
fees that apply based upon members achieving certain volume thresholds.
Within this environment, market participants can freely and often
do shift their order flow among the Exchange and competing venues in
response to changes in their respective pricing schedules. As such, the
proposal represents a reasonable attempt by the Exchange to increase
its liquidity and market share relative to its competitors.
The Exchange believes that it is reasonable to establish a new
credit tier of $0.0015 per share executed in Tape A or Tape B, and
$0.0010 per share executed in Tape C, for a member that (i) provides
0.10% or more of TCV [sic] though non-displayed orders (other than
midpoint orders) and (ii) increases providing non-displayed liquidity
(other than midpoint orders) by 30% or more relative to the member's
September 2025 average TCV [sic] provided through non displayed orders
(other than midpoint orders). Unless otherwise extended, this credit
will expire no later than the end of March 2026. The new credit will
encourage members to increase their non-display liquidity (other than
midpoint orders) providing activity on the Exchange, which will improve
overall market quality, to the benefit of all market participants.
Establishing a 6-month sunset for the comparative baseline ensures that
the baseline being used for the tier does not become outdated.
It is also reasonable, equitable, and not unfairly discriminatory
for the Exchange to establish this new credit tier because it will
encourage members to increase their level of non-displayed liquidity
providing activity (other than midpoint orders) on the Exchange. To the
extent that the Exchange succeeds in increasing the levels of liquidity
and activity on the Exchange, then the Exchange will experience
improvements in its market quality, which stands to benefit all market
participants. The Exchange notes that the new proposed credit tier is
voluntary. The Exchange further believes that the credit is not
unfairly discriminatory because it will be applied uniformly to all
members that meet the specified criteria.
The Exchange notes that if there are market participants who are
dissatisfied with the proposal, they are free to shift their order flow
to competing venues that may offer them more generous pricing or less
stringent qualifying criteria.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
Intramarket Competition
The Exchange does not believe that its proposal will place any
category of Exchange participant at a competitive disadvantage. The
Exchange intends for its proposals to incentivize liquidity adding
activity. The Exchange notes that its members are free to trade on
other venues to the extent they believe that the proposal is not
attractive. As one can observe by looking at any market share chart,
price competition between exchanges is fierce, with liquidity and
market share moving freely between exchanges in reaction to fee and
credit changes.
Intermarket Competition
In terms of intermarket competition, the Exchange notes that it
operates in a highly competitive market in which market participants
can readily favor competing venues if they deem fee levels at a
particular venue to be excessive, or rebate or credit opportunities
available at other venues to be more favorable. In such an environment,
the Exchange must continually adjust its fees and credits to remain
competitive with other exchanges and with alternative trading systems
that have been exempted from compliance with the statutory standards
applicable to exchanges. Because competitors are free to modify their
own fees and credits in response, and because market participants may
readily adjust their order routing practices, the Exchange believes
that the degree to
[[Page 57230]]
which adding a new credit tier in this market may impose any burden on
competition is extremely limited.
In this instance, the introduction of a new credit tier in Equity
7, Section 118(a)(1) is intended to incentivize liquidity adding
activity on the Exchange and does not impose a burden on competition.
By offering a new credit to market participants that meet certain
criteria, the Exchange is enhancing its appeal as a trading venue and
encouraging increased participation in its order execution and routing
processes, while maintaining a competitive pricing structure. As
discussed above, the proposed credit does not disadvantage any specific
group of market participants. Instead, it provides equitable incentives
that are available to all members that meet the applicable criteria.
In sum, if the change proposed herein is unattractive to market
participants, it is likely that the Exchange will lose market share as
a result. Accordingly, the Exchange does not believe that the proposed
change will impair the ability of members or competing order execution
venues to maintain their competitive standing in the financial markets.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act.\8\
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\8\ 15 U.S.C. 78s(b)(3)(A)(ii).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: (i)
necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#f381869f96de909c9e9e969d8780b3809690dd949c85"><span class="__cf_email__" data-cfemail="d6a4a3bab3fbb5b9bbbbb3b8a2a596a5b3b5f8b1b9a0">[email protected]</span></a>. Please include
file number SR-NASDAQ-2025-094 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-NASDAQ-2025-094. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). Copies of the filing will be available for inspection and
copying at the principal office of the Exchange. Do not include
personal identifiable information in submissions; you should submit
only information that you wish to make available publicly. We may
redact in part or withhold entirely from publication submitted material
that is obscene or subject to copyright protection. All submissions
should refer to file number SR-NASDAQ-2025-094 and should be submitted
on or before December 31, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-22403 Filed 12-9-25; 8:45 am]
BILLING CODE 8011-01-P
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